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Derivative Instruments

6 Months Ended

Jan. 31, 2021

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 income (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 January 31, 2021, are as follows:

Settlement Date		U.S. Dollar Amount				NOK Amount
Feb-21			200,000				1,818,509
Mar-21			200,000				1,693,583
Apr-21			200,000				1,693,903
May-21			200,000				1,694,083
Total		$	800,000				6,900,078

Settlement Date		U.S. Dollar Amount				EUR Amount
Feb-21			175,000				149,009
Mar-21			200,000				163,480
Apr-21			200,000				163,360
May-21			200,000				163,253
		$	775,000				639,102

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

				January 31, 2021				July 31, 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		$	8			$	10

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

				Amount of Gain (Loss) Recognized on Derivatives
				Three Months Ended January 31,								Six Months Ended January 31,
Amount of Gain (Loss) Recognized on Derivatives				(in thousands)								(in thousands)
Derivatives not designated or not qualifying as hedging instruments		Location of Gain (Loss) Recognized on Derivatives		2021				2020				2021				2020
Foreign exchange forward contracts		Net gain (loss) resulting from foreign exchange transactions		$	92			$	20				51			$	(54	)

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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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