Derivative Instruments

3 Months Ended

Nov. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 11 – Derivative Instruments

Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign 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 current and probable future debt. The Company’s foreign 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.

At November 30, 2024 exchange rates, notional amounts of foreign 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 $214.0 million. The fair value of the contracts is included on the Condensed 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 March 2027, 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 November 30, 2024 exchange rates, approximately $1.7 million would be reclassified to Cost of revenue in the next year.

At November 30, 2024, interest rate swap agreements maturing from August 2027 through January 2032 had notional amounts that aggregated to $667.8 million. The fair value of the contracts is included on the Condensed 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 November 30, 2024 interest rates, approximately $9.5 million would be credited to interest expense in the next year.

Fair Values of Derivative Instruments

(in millions)


	Asset Derivatives					Liability Derivatives
		November 30, 2024		August 31, 2024			November 30, 2024		August 31, 2024
	Balance sheet location	Fair Value		Fair Value		Balance sheet location	Fair Value		Fair Value
Derivatives designated as hedging instruments
Foreign exchange contracts	Accounts receivable, net	$	3.3	$	4.3	Accounts payable and accrued liabilities	$	1.1	$	0.1
Interest rate swap contracts	Accounts receivable, net		25.5		19.7	Accounts payable and accrued liabilities		—		1.3
		$	28.8	$	24.0		$	1.1	$	1.4

The Effect of Derivative Instruments on the Statements of Income

(in millions)

Three months ended November 30, 2024 and 2023


Derivatives in cash flow hedging relationships	Location of gain (loss) recognized in income on derivatives	Gain (loss) recognized in income on derivatives three months ended November 30,
		2024			2023
Foreign exchange contracts	Interest and foreign exchange	$	(0.1	)	$	0.2


Derivatives in cash flow hedging relationships	Gain (loss) recognized in OCI on derivatives three months ended November 30,						Location of gain (loss) reclassified from accumulated OCI into income	Gain (loss) reclassified from accumulated OCI into income three months ended November 30,						Location of gain (loss) on derivatives (amount excluded from effectiveness testing)	Gain recognized on derivatives (amount excluded from effectiveness testing) three months ended November 30,
	2024			2023				2024			2023				2024		2023
Foreign exchange contracts	$	(1.3	)	$	2.4		Revenue	$	0.5		$	0.2		Revenue	$	0.8	$	0.6
Foreign exchange contracts		(0.4	)		(0.2	)	Cost of revenue		(0.1	)		(0.1	)	Cost of revenue		—		0.3
Interest rate swap contracts		10.9			3.1		Interest and foreign exchange		4.0			4.3		Interest and foreign exchange		—		—
	$	9.2		$	5.3			$	4.4		$	4.4			$	0.8	$	0.9

The following table presents the amounts in the Condensed 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 three months ended November 30, 2024 and 2023:


	Three months ended November 30,
	2024					2023
	Total		Amount of gain (loss) on cash flow hedge activity			Total		Amount of gain (loss) on cash flow hedge activity
Revenue	$	875.9	$	0.5		$	808.8	$	0.2
Cost of revenue	$	702.3	$	(0.1	)	$	687.5	$	(0.1	)
Interest and foreign exchange	$	23.4	$	4.0		$	23.2	$	4.3