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Financial Instruments and Risk Management | 6 Months Ended
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Aug. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments and Risk Management | Note 12 - Financial Instruments and Risk Management Foreign Currency Risk The U.S. Dollar is the functional currency for the Company and all of its subsidiaries and is also the reporting currency for the Company. 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 and operating expenses. As a result of such transactions, portions of our cash, accounts receivable and accounts payable are denominated in foreign currencies. Approximately 14% and 15% of our net sales revenue was denominated in foreign currencies during the three and six months ended August 31, 2025, respectively, compared to 12% and 14% for the same periods last year, respectively. These sales were primarily denominated in Euros, Canadian Dollars and British Pounds. We make most of our inventory purchases from manufacturers in Asia and primarily use the U.S. Dollar for such purchases. In our condensed consolidated statements of (loss) income, foreign currency exchange rate gains and losses resulting from the remeasurement of foreign income tax receivables and payables and deferred income tax assets and liabilities are recognized in income tax (benefit) expense, and all other foreign currency exchange rate gains and losses are recognized in SG&A. During the three and six months ended August 31, 2025, we recorded foreign currency exchange rate net gains of $2.9 million and $9.5 million, respectively, in income tax expense, compared to net losses of $0.2 million and $0.3 million for the same periods last year, respectively. During the three and six months ended August 31, 2025, we recorded foreign currency exchange rate net gains of $0.4 million and $2.1 million, respectively, in SG&A, compared to $0.6 million for both the same periods last year. We mitigate certain foreign currency exchange rate risk by using forward contracts to protect against the foreign currency exchange rate risk inherent in our transactions denominated in foreign currencies. We do not enter into any derivatives or similar instruments for trading or other speculative purposes. Certain of our forward contracts are designated as cash flow hedges (“foreign currency contracts”) and are recorded on the balance sheet at fair value with changes in fair value recorded in Other Comprehensive Loss (“OCI”) until the hedge transaction is settled, at which point amounts are reclassified from Accumulated Other Comprehensive (Loss) Income (“AOCI”) to our condensed consolidated statements of (loss) income. Foreign currency derivatives for which we have not elected hedge accounting consist of certain forward contracts, and any changes in the fair value of these derivatives are recorded in our condensed consolidated statements of (loss) income. These undesignated derivatives are used to hedge monetary net asset and liability positions. Cash flows from our foreign currency derivatives are classified as cash flows from operating activities in our condensed consolidated statements of cash flows, which is consistent with the classification of the cash flows from the underlying hedged item. We evaluate our derivatives designated as cash flow hedges each quarter to assess hedge effectiveness. Interest Rate Risk Interest on our outstanding debt as of August 31, 2025 and February 28, 2025 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 a portion of our outstanding principal balance under the Credit Agreement, which totaled $898.6 million and $921.9 million as of August 31, 2025 and February 28, 2025, respectively. As of August 31, 2025 and February 28, 2025, $625 million and $550 million of the outstanding principal balance under the Credit Agreement, respectively, was hedged with interest rate swaps to fix the interest rate we pay. Our interest rate swaps are designated as cash flow hedges and are recorded on the balance sheet at fair value with changes in fair value recorded in OCI until the hedge transaction is settled, at which point amounts are reclassified from AOCI to our condensed consolidated statements of (loss) income. Cash flows from our interest rate swaps are classified as cash flows from operating activities in our condensed consolidated statements of cash flows, which is consistent with the classification of the cash flows from the underlying hedged item. We evaluate our derivatives designated as cash flow hedges each quarter to assess hedge effectiveness. The following tables summarize the fair values of our derivative instruments as of the end of the periods presented:
(in thousands) | August 31, 2025
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
Forward contracts - sell Euro | Cash flow |  | 8/2027 |  | € | 98,300 |  |  | $ | 20 |  |  | $ | 65 |  |  | $ | 4,105 |  |  | $ | 506 |
Forward contracts - sell Canadian Dollars | Cash flow |  | 2/2027 |  | $ | 46,800 |  |  | 6 |  |  | 14 |  |  | 619 |  |  | 181 |
Forward contracts - sell Pounds | Cash flow |  | 12/2027 |  | £ | 44,975 |  |  | — |  |  | 24 |  |  | 1,462 |  |  | 717 |
Forward contracts - sell Norwegian Kroner | Cash flow |  | 2/2027 |  | kr | 33,500 |  |  | 8 |  |  | 2 |  |  | 57 |  |  | 10 |
Interest rate swaps (1) | Cash flow |  | 8/2027 |  | $ | 725,000 |  |  | 604 |  |  | 139 |  |  | 106 |  |  | — |
Subtotal |  |  |  |  |  |  | 638 |  |  | 244 |  |  | 6,349 |  |  | 1,414 |
Derivatives not designated under hedge accounting |  |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts - sell Euro | (2) |  | 9/2025 |  | € | 3,475 |  |  | 10 |  |  | — |  |  | — |  |  | — |
Forward contracts - buy Pounds | (2) |  | 9/2025 |  | £ | 9,000 |  |  | — |  |  | — |  |  | 35 |  |  | — |
Subtotal |  |  |  |  |  |  | 10 |  |  | — |  |  | 35 |  |  | — |
Total fair value |  |  |  |  |  |  | $ | 648 |  |  | $ | 244 |  |  | $ | 6,384 |  |  | $ | 1,414 |
(in thousands) | February 28, 2025
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
Forward contracts - sell Euro | Cash flow |  | 2/2026 |  | € | 35,000 |  |  | $ | 1,266 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Forward contracts - sell Canadian Dollars | Cash flow |  | 2/2026 |  | $ | 8,000 |  |  | 38 |  |  | — |  |  | — |  |  | — |
Forward contracts - sell Pounds | Cash flow |  | 2/2026 |  | £ | 24,950 |  |  | 788 |  |  | — |  |  | 99 |  |  | — |
Forward contracts - sell Norwegian Kroner | Cash flow |  | 8/2025 |  | kr | 10,000 |  |  | 71 |  |  | — |  |  | — |  |  | — |
Interest rate swaps | Cash flow |  | 8/2026 |  | $ | 550,000 |  |  | 763 |  |  | 302 |  |  | 221 |  |  | — |
Subtotal |  |  |  |  |  |  | 2,926 |  |  | 302 |  |  | 320 |  |  | — |
Derivatives not designated under hedge accounting |  |  |  |  |  |  |  |  |  |  |  |  |
Forward contracts - sell Euro | (2) |  | 3/2025 |  | € | 680 |  |  | — |  |  | — |  |  | 2 |  |  | — |
Forward contracts - sell Pounds | (2) |  | 3/2025 |  | £ | 1,280 |  |  | — |  |  | — |  |  | 18 |  |  | — |
Subtotal |  |  |  |  |  |  | — |  |  | — |  |  | 20 |  |  | — |
Total fair value |  |  |  |  |  |  | $ | 2,926 |  |  | $ | 302 |  |  | $ | 340 |  |  | $ | — |
(1)Includes a forward-starting interest rate swap agreement with a notional amount of $100 million that becomes effective on March 1, 2026. (2)These forward contracts, for which we have not elected hedge accounting, hedge monetary net asset and liability positions for the notional amounts reported, creating an economic hedge against currency movements. The pre-tax effects of derivative instruments designated as cash flow hedges were as follows for the periods presented:
| Three Months Ended August 31,
| Loss Recognized in AOCI |  | Gain (Loss) Reclassified from AOCI into Income
(in thousands) | 2025 |  | 2024 |  | Location |  | 2025 |  | 2024
Foreign currency contracts - cash flow hedges | $ | (2,368) |  |  | $ | (1,317) |  |  | Sales revenue, net |  | $ | (1,770) |  |  | $ | (193) |
Interest rate swaps - cash flow hedges | (743) |  |  | (3,535) |  |  | Interest expense |  | 1,149 |  |  | 965 |
Total | $ | (3,111) |  |  | $ | (4,852) |  |  |  |  | $ | (621) |  |  | $ | 772 |
| Six Months Ended August 31,
| Gain (Loss) Recognized in AOCI |  | Gain (Loss) Reclassified from AOCI into Income
(in thousands) | 2025 |  | 2024 |  | Location |  | 2025 |  | 2024
Foreign currency contracts - cash flow hedges | $ | (12,075) |  |  | $ | (1,425) |  |  | Sales revenue, net |  | $ | (2,493) |  |  | $ | (9) |
Interest rate swaps - cash flow hedges | 1,870 |  |  | (1,243) |  |  | Interest expense |  | 2,077 |  |  | 2,049 |
Total | $ | (10,205) |  |  | $ | (2,668) |  |  |  |  | $ | (416) |  |  | $ | 2,040 |
The pre-tax effects of derivative instruments not designated under hedge accounting were as follows for the periods presented:
| Gain (Loss) Recognized in Income
|  |  | Three Months Ended August 31, |  | Six Months Ended August 31,
(in thousands) | Location |  | 2025 |  | 2024 |  | 2025 |  | 2024
Forward contracts | SG&A |  | $ | (169) |  |  | $ | 66 |  |  | $ | (505) |  |  | $ | 88 |
Total |  |  | $ | (169) |  |  | $ | 66 |  |  | $ | (505) |  |  | $ | 88 |
We expect a net loss of $5.7 million associated with foreign currency contracts and interest rate swaps currently recorded in AOCI to be reclassified into income over the next twelve months. The amount ultimately realized, however, will differ as exchange rates and interest rates change and the underlying contracts settle. See Notes 11 and 13 for more information. Counterparty Credit Risk Financial instruments, including foreign currency contracts, forward contracts, and interest rate swaps, expose us to counterparty credit risk for non-performance. We manage our exposure to counterparty credit risk by only dealing with counterparties who are substantial international financial institutions with significant experience using such derivative instruments. We believe that the risk of incurring credit losses is remote.

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- 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 Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/825/tableOfContent + Details
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