XML 102 R25.htm IDEA: XBRL DOCUMENT
v3.20.1

Financial Instruments and Risk Management | 12 Months Ended
--- | ---
Feb. 29, 2020
Financial Instruments, Owned, at Fair Value [Abstract] |
Financial Instruments and Risk Management | Note 18 - Financial Instruments and Risk Management Foreign Currency Risk – Our functional currency is the U.S. Dollar. By operating internationally, we are subject to foreign currency risk from transactions denominated in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases and operating expenses. As a result of such transactions, portions of our cash, trade accounts receivable and trade accounts payable are denominated in foreign currencies. For fiscal 2020, approximately 14% of our net sales revenue was in foreign currency. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos and Canadian Dollars. We make most of our inventory purchases from the Far East and primarily use the U.S. Dollar for such purchases. In our consolidated statements of income, exchange gains and losses resulting from the remeasurement of foreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities are recognized in their respective income tax lines, and all other foreign exchange gains and losses are recognized in SG&A. We recorded net exchange gains (losses) from foreign currency fluctuations, including the impact of currency hedges and the cross-currency debt swap, of $2.2, $1.3 and $(3.1) million in SG&A during fiscal 2020, 2019 and 2018, respectively. We hedge against certain foreign currency exchange rate-risk by using a series of forward contracts and zero-cost collars designated as cash flow hedges and mark-to-market derivatives to protect against the foreign currency exchange risk inherent in our forecasted transactions denominated in currencies other than the U.S. Dollar. We do not enter into any forward exchange contracts or similar instruments for trading or other speculative purposes. The effective portion of the changes in fair value of these instruments is reported in OCI and reclassified into SG&A in the same period they are settled. The ineffective portion, which is not material for any year presented, is immediately recognized in SG&A. Interest Rate Risk – Interest on our outstanding debt as of February 29, 2020 is based on floating interest rates. If short-term interest rates increase, we will incur higher interest expense on any future outstanding balances of floating rate debt. Floating interest rates are hedged with interest rate swaps to effectively fix interest rates on $225.0 million of the outstanding principal balance under the Credit Agreement, which totaled $320.0 million as of February 29, 2020. The following table summarizes the fair values of our various derivative instruments at the end of fiscal 2020 and 2019:
|  | February 29, 2020
(in thousands) Derivatives designated as hedging instruments |  | Hedge Type |  | Final Settlement Date |  | Notional Amount |  | Prepaid Expenses and Other Current Assets |  | Other Assets |  | Accrued Expenses and Other Current Liabilities |  | Other Liabilities Non-current
Zero-cost collar - Euro |  | Cash flow |  | 2/2021 |  | €8,000 |  | $ | 74 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign currency contracts - sell Euro |  | Cash flow |  | 5/2021 |  | €25,875 |  | 837 |  |  | — |  |  | — |  |  | 15 |
Foreign currency contracts - sell Canadian Dollars |  | Cash flow |  | 2/2021 |  | $14,000 |  | 202 |  |  | — |  |  | — |  |  | — |
Zero-cost collar - Pounds |  | Cash flow |  | 2/2021 |  | £6,500 |  | — |  |  | — |  |  | 144 |  |  | — |
Foreign currency contracts - sell Pounds |  | Cash flow |  | 5/2021 |  | £13,000 |  | 435 |  |  | 23 |  |  | — |  |  | — |
Foreign currency contracts - sell Mexican Pesos |  | Cash flow |  | 5/2020 |  | $10,000 |  | 12 |  |  | — |  |  | — |  |  | — |
Interest rate swaps |  | Cash flow |  | 1/2024 |  | $225,000 |  | — |  |  | — |  |  | 3,489 |  |  | 7,228 |
Subtotal |  |  |  |  |  |  |  | 1,560 |  |  | 23 |  |  | 3,633 |  |  | 7,243 |
Derivatives not designated under hedge accounting |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts - cross-currency debt swaps - Euro |  | (1) |  | 04/2020 |  | €5,280 |  | 473 |  |  | — |  |  | — |  |  | — |
Foreign currency contracts - cross-currency debt swaps - Pound |  | (1) |  | 04/2020 |  | £6,395 |  | 27 |  |  | — |  |  | — |  |  | — |
Subtotal |  |  |  |  |  |  |  | 500 |  |  | — |  |  | — |  |  | — |
Total fair value |  |  |  |  |  |  |  | $ | 2,060 |  |  | $ | 23 |  |  | $ | 3,633 |  |  | $ | 7,243 |
|  | February 28, 2019
(in thousands) Derivatives designated as hedging instruments |  | Hedge Type |  | Final Settlement Date |  | Notional Amount |  | Prepaid Expenses and Other Current Assets |  | Other Assets |  | Accrued Expenses and Other Current Liabilities |  | Other Liabilities Non-current
Zero-cost collar - Euro |  | Cash flow |  | 2/2020 |  | €9,500 |  | $ | 11 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign currency contracts - sell Euro |  | Cash flow |  | 2/2020 |  | €29,000 |  | 1,047 |  |  | — |  |  | — |  |  | — |
Foreign currency contracts - sell Canadian Dollars |  | Cash flow |  | 2/2020 |  | $16,000 |  | 168 |  |  | — |  |  | — |  |  | — |
Zero-cost collar - Pounds |  | Cash flow |  | 5/2020 |  | £4,500 |  | — |  |  | — |  |  | 200 |  |  | — |
Foreign currency contracts - sell Pounds |  | Cash flow |  | 5/2020 |  | £19,500 |  | 248 |  |  | — |  |  | — |  |  | 13 |
Foreign currency contracts - sell Mexican Pesos |  | Cash flow |  | 9/2019 |  | $30,000 |  | — |  |  | — |  |  | 58 |  |  | — |
Interest rate swaps |  | Cash flow |  | 1/2024 |  | $225,000 |  | 512 |  |  | — |  |  | — |  |  | 339 |
Subtotal |  |  |  |  |  |  |  | 1,986 |  |  | — |  |  | 258 |  |  | 352 |
Derivatives not designated under hedge accounting |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts - cross-currency debt swap - Euro |  | (1) |  | 04/2020 |  | €5,280 |  | — |  |  | 218 |  |  | — |  |  | — |
Foreign currency contracts - cross-currency debt swaps - Pound |  | (1) |  | 04/2020 |  | £6,395 |  | — |  |  | — |  |  | — |  |  | 292 |
Subtotal |  |  |  |  |  |  |  | — |  |  | 218 |  |  | — |  |  | 292 |
Total fair value |  |  |  |  |  |  |  | $ | 1,986 |  |  | $ | 218 |  |  | $ | 258 |  |  | $ | 644 |
(1) | These are foreign currency contracts for which we have not elected hedge accounting. We refer to them as “cross-currency debt swaps”. They, in effect, adjust the currency denomination of a portion of our outstanding debt to the Euro and British Pound, as applicable, for the notional amounts reported, creating an economic hedge against currency movements.
The pre-tax effect of derivative instruments for fiscal 2020 and 2019 is as follows:
|  | Years Ended Last Day of February,
|  | Gain (Loss) Recognized in OCI (effective portion) |  | Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income |  | Gain (Loss) Recognized As Income
(in thousands) |  | 2020 |  | 2019 |  | Location |  | 2020 |  | 2019 |  | Location |  | 2020 |  | 2019
Currency contracts - cash flow hedges |  | $ | (2,756 | ) |  | $ | (94 | ) |  | SG&A |  | $ | (2,977 | ) |  | $ | (2,488 | ) |  |  |  | $ | — |  |  | $ | — |
Interest rate swaps - cash flow hedges |  | (10,890 | ) |  | (2,308 | ) |  | Interest expense |  | — |  |  | — |  |  | Interest expense |  | (262 | ) |  | 515 |
Cross-currency debt swaps - principal |  | — |  |  | — |  |  |  |  | — |  |  | — |  |  | SG&A |  | 574 |  |  | 700 |
Cross-currency debt swaps - interest |  | — |  |  | — |  |  |  |  | — |  |  | — |  |  | Interest Expense |  | 147 |  |  | 147 |
Total |  | $ | (13,646 | ) |  | $ | (2,402 | ) |  |  |  | $ | (2,977 | ) |  | $ | (2,488 | ) |  |  |  | $ | 459 |  |  | $ | 1,362 |
We expect a loss of $2.1 million associated with foreign currency contracts and interest rate swaps currently reported in accumulated other comprehensive income, to be reclassified into income over the next twelve months. The amount ultimately realized, however, will differ as exchange rates change and the underlying contracts settle. See Notes 1, 17 and 19 to these consolidated financial statements for more information on our hedging activities. Counterparty Credit Risk – Financial instruments, including foreign currency contracts, cross-currency debt swaps and interest rate swaps, expose us to counterparty credit risk for nonperformance. We manage our exposure to counterparty credit risk by dealing with counterparties who are substantial international financial institutions with significant experience using such derivative instruments. Although our theoretical credit risk is the replacement cost at the then-estimated fair value of these instruments, we believe that the risk of incurring credit risk losses is remote. Risks Inherent in Cash and Cash Equivalents – As the levels of our cash and cash equivalents change, they can become more subject to foreign exchange rate risk, interest rate risk, credit risk, and liquidity risk. Cash consists of interest-bearing, non-interest-bearing and short-term investment accounts. We consider money market accounts to be cash equivalents. The following table summarizes our cash and cash equivalents at the end of fiscal 2020 and 2019:
| Fiscal Years Ended Last Day of February
| 2020 |  | 2019
(in thousands) | Carrying Amount | Range of Interest Rates |  | Carrying Amount | Range of Interest Rates
Cash, interest and non-interest-bearing accounts | $ | 21,819 |  | 0.00 to 0.30% |  | $ | 10,956 |  | 0.00 to 0.30%
Money market funds | 2,648 |  | 0.15% to 5.39% |  | 915 |  | 0.00 to 1.25%
Total cash and cash equivalents | $ | 24,467 |  |  |  | $ | 11,871 |  |

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_FinancialInstrumentsOwnedAtFairValueAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration