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Derivative Instruments | 12 Months Ended
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Aug. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Note 13 — Derivative Instruments Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign currency forward exchange contracts with established financial institutions are utilized to hedge a portion of that risk. Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain debt. The Company’s foreign currency forward exchange contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the effective portion of unrealized gains and losses is recorded in accumulated other comprehensive income or loss. At August 31, 2022 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $73.6 million. The fair value of the contracts is included on the Consolidated Balance Sheets as Accounts payable and accrued liabilities when in a loss position, or as Accounts receivable, net when in a gain position. As the contracts mature at various dates through October 2023, any such gain or loss remaining will be recognized in manufacturing revenue or cost of revenue along with the related transactions. In the event that the underlying transaction does not occur or does not occur in the period designated at the inception of the hedge, the amount classified in accumulated other comprehensive loss would be reclassified to the results of operations in Interest and foreign exchange at the time of occurrence. At August 31, 2022 exchange rates, approximately $3.5 million loss would be reclassified to revenue or cost of revenue in the next year. At August 31, 2022, interest rate swap agreements maturing from September 2023 through January 2032 had notional amounts that aggregated to $478.7 million. The fair value of the contracts are included on the Consolidated Balance Sheets in Accounts payable and accrued liabilities when in a loss position, or in Accounts receivable, net when in a gain position. As interest expense on the underlying debt is recognized, amounts corresponding to the interest rate swap are reclassified from Accumulated other comprehensive loss and charged or credited to interest expense. At August 31, 2022 interest rates, approximately $6.4 million would be credited to interest expense in the next year. Fair Values of Derivative Instruments
|  | Asset Derivatives |  |  | Liability Derivatives |
|  |  |  | August 31, |  |  |  |  | August 31, |
|  |  |  | 2022 |  |  | 2021 |  |  |  |  | 2022 |  |  | 2021 |
(In millions) |  | Balance sheet caption |  | Fair Value |  |  | Fair Value |  |  | Balance sheet caption |  | Fair Value |  |  | Fair Value |
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |
Foreign forward exchange contracts |  | Accounts receivable, net |  | $ | 0.6 |  |  | $ | 0.1 |  |  | Accounts payable and accrued liabilities |  | $ | 2.9 |  |  | $ | 0.3 |
Interest rate swap contracts |  | Accounts receivable, net |  |  | 20.8 |  |  |  | — |  |  | Accounts payable and accrued liabilities |  |  | — |  |  |  | 10.0 |
|  |  |  | $ | 21.4 |  |  | $ | 0.1 |  |  |  |  | $ | 2.9 |  |  | $ | 10.3 |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign forward exchange contracts |  | Accounts receivable, net |  | $ | — |  |  | $ | — |  |  | Accounts payable and accrued liabilities |  | $ | 0.1 |  |  | $ | 0.1 |
The Effect of Derivative Instruments on the Consolidated Statements of Income
Derivatives in cash flow hedging relationships |  | Location of gain (loss) recognized in income on derivative |  | Gain (loss) recognized in income on derivatives Years ended August 31, |
|  |  |  | 2022 |  |  | 2021 |
Foreign forward exchange contract |  | Interest and foreign exchange |  | $ | (0.3 | ) |  | $ | (0.1 | )
Derivatives in cash flow hedging relationships |  | Gain (loss) recognized in OCI on derivatives Years ended August 31, |  |  | Location of gain (loss) reclassified from accumulated OCI into income |  | Gain (loss) reclassified from accumulated OCI into income Years ended August 31, |  |  | Location of gain (loss) in income on derivative (amount excluded from effectiveness testing) |  | Gain (loss) recognized on derivative (amount excluded from effectiveness testing) Years ended August 31, |
|  | 2022 |  |  | 2021 |  |  |  |  | 2022 |  |  | 2021 |  |  |  |  | 2022 |  |  | 2021 |
Foreign forward exchange contracts |  | $ | (4.7 | ) |  | $ | (2.0 | ) |  | Revenue |  | $ | (1.5 | ) |  | $ | (1.3 | ) |  | Revenue |  | $ | 0.9 |  |  | $ | 0.6 |
Foreign forward exchange contracts |  |  | 0.5 |  |  |  | — |  |  | Cost of revenue |  |  | 0.3 |  |  |  | (0.1 | ) |  | Cost of revenue |  |  | 0.7 |  |  |  | 0.1 |
Interest rate swap contracts |  |  | 26.1 |  |  |  | 0.6 |  |  | Interest and foreign exchange |  |  | (4.9 | ) |  |  | (5.3 | ) |  | Interest and foreign exchange |  | — |  |  | — |
|  | $ | 21.9 |  |  | $ | (1.4 | ) |  |  |  | $ | (6.1 | ) |  | $ | (6.7 | ) |  |  |  | $ | 1.6 |  |  | $ | 0.7 |
The following table presents the amounts in the Consolidated Statements of Income in which the effects of the cash flow hedges are recorded and the effects of the cash flow hedge activity on these line items for the years ended August 31, 2022, 2021 and 2020:
|  | For the Year Ended August 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
(In millions) |  | Total |  |  | Amount of gain (loss) on cash flow hedge activity |  |  | Total |  |  | Amount of gain (loss) on cash flow hedge activity |  |  | Total |  |  | Amount of gain (loss) on cash flow hedge activity |
Revenue |  | $ | 2,977.7 |  |  | $ | (1.5 | ) |  | $ | 1,747.9 |  |  | $ | (1.3 | ) |  | $ | 2,792.2 |  |  | $ | (0.7 | )
Cost of revenue |  |  | 2,671.7 |  |  |  | 0.3 |  |  |  | 1,516.3 |  |  |  | (0.1 | ) |  |  | 2,439.1 |  |  |  | (2.2 | )
Interest and foreign exchange |  |  | 57.4 |  |  |  | (4.9 | ) |  |  | 43.3 |  |  |  | (5.3 | ) |  |  | 43.6 |  |  |  | (2.7 | )

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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 https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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