Derivative Instruments

9 Months Ended

Apr. 30, 2017

Derivative Instruments [Abstract]

Derivative Instruments

Note 3—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 - NOK exchange rate. Subsequent to the Spin-Off and until November 2016, IDT provided hedging services to the Company pursuant to the Transition Services Agreement (see Note 7). As of November 16, 2016, the Company entered into 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 8). The Company does not apply hedge accounting to these contracts; therefore the changes in fair value are recorded in earnings. 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 April 30, 2017 were as follows:

Settlement Date	U.S. Dollar Amount		NOK Amount
May 2017		500,000		4,132,484
June 2017*		500,000		4,179,494
July 2017*		500,000		4,179,038

* Entered into pursuant to the Foreign Exchange Agreement with Western Alliance Bank.

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

Asset Derivatives	Balance Sheet Location	April 30, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Other current assets	$	—	$	21

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

Liability Derivatives	Balance Sheet Location	April 30, 2017		July 31, 2016
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Accrued expenses	$	44	$	15

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

		Amount of Gain (Loss) Recognized on Derivatives
		Three Months Ended April 30,					Nine Months Ended April 30,
Derivatives not designated or not qualifying as hedging instruments	Location of Gain (Loss) Recognized on Derivatives	2017			2016		2017			2016
		(in thousands)
Foreign exchange forward contracts	Net (loss) gain resulting from foreign exchange transactions	$	(92	)	$	156	$	(68	)	$	(68	)