Derivative Instruments

9 Months Ended

Apr. 30, 2019

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 – Norwegian Kroner (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 8). 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 9). 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.

As of April 30, 2019, the outstanding foreign exchange contracts entered into with Western Alliance Bank pursuant to the Foreign Exchange Agreement are as follows:

Settlement Date	U.S. Dollar Amount		NOK Amount
May-19	$	500,000		4,107,440
Jun-19		500,000		4,102,240
Jul-19		500,000		4,097,140
Aug-19		500,000		4,091,590
Total	$	2,000,000		16,398,410

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

Derivatives Instruments	Balance Sheet Location	April 30, 2019		July 31, 2018
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Accrued expenses	$	96	$	41

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

		Amount of Loss Recognized on Derivatives
Derivatives not designated or	Statement of	Three Months Ended				Nine Months Ended
not qualifying as hedging	Comprehensive Loss	April 30,				April 30,
instruments	Location	2019		2018		2019		2018
		(in thousands)				(in thousands)
Foreign exchange forward contracts	Net loss resulting from foreign exchange transactions	$	80	$	-	$	254	$	1