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Derivative Instruments

3 Months Ended

Oct. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Note 4—Derivative Instruments

The primary risk managed by the Company using derivative instruments is foreign exchange risk. Foreign exchange forward contracts are entered into as hedges against unfavorable fluctuations in the U.S. Dollar (USD) to Norwegian Kroner (NOK) and USD to Euro (EUR) exchange rates. The Company is party to a Foreign Exchange Agreement with Western Alliance Bank allowing the Company to enter into foreign exchange contracts under its revolving credit facility with the bank (see Note 9). The Company does not apply hedge accounting to these contracts, and therefore the changes in fair value are recorded in consolidated statements of comprehensive loss. By using derivative instruments to mitigate exposures to changes in foreign exchange rates, the Company is exposed to credit risk from the failure of the counterparty to perform under the terms of the contract. The credit or repayment risk is minimized by entering into transactions with high-quality counterparties.

The outstanding contracts at October 31, 2020, are as follows:

Settlement Date		U.S. Dollar Amount				NOK Amount
Nov-20			200,000				1,819,209
Dec-20			200,000				1,819,109
Jan-21			200,000				1,818,709
Feb-21			200,000				1,818,509
Total		$	800,000				7,275,536

Settlement Date		U.S. Dollar Amount				EUR Amount
Nov-20			175,000				149,365
Dec-20			175,000				149,276
Jan-21			175,000				149,111
Feb-21			175,000				149,009
		$	700,000				596,761

The fair value of outstanding derivative instruments recorded in the accompanying consolidated balance sheets were as follows:

				October 31,				July 31,
				2020				2020
Assets and Liabilities Derivatives:		Balance Sheet Location		(in thousands)
Derivatives not designated or not qualifying as hedging instruments
Foreign exchange forward contracts		Other current assets		$	-			$	10
Foreign exchange forward contracts		Accrued expenses and other current liabilities		$	41			$	-

The effects of derivative instruments on the consolidated statements of comprehensive income (loss) were as follows:

				Amount of Loss Recognized on Derivatives
				Three Months Ended
				October 31,
Amount of Loss Recognized on Derivatives				(in thousands)
Derivatives not designated or not qualifying as hedging instruments		Location of Loss Recognized on Derivatives		2020				2019
Foreign exchange forward contracts		Net loss resulting from foreign exchange transactions		$	(41	)		$	(74	)

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- References

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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 http://asc.fasb.org/topic&trid=2229140

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