Derivative Instruments

6 Months Ended

Jan. 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 – Norwegian Kroner (NOK) exchange rate. 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 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 January 31, 2020, are as follows:

Settlement Date	U.S. Dollar Amount		NOK Amount
Feb-20	$	400,000		3,553,560

On February 19, 2020, the Company entered into the following foreign exchange forward contracts:

Settlement Date	U.S. Dollar Amount		NOK Amount
Mar-20	$	350,000		3,216,849
Apr-20		350,000		3,216,534
May-20		350,000		3,216,464
Jun-20		350,000		3,216,359
Jul-20		350,000		3,216,114
Aug-20		350,000		3,216,324
Total	$	2,100,000		19,298,644

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

Derivatives Instruments	Balance Sheet Location	January 31, 2020		July 31, 2019
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forward contracts	Accrued expenses and other current liabilities	$	14	$	38

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

		Amount of Income (Loss) Recognized on Derivatives
Derivatives not designated or not qualifying as hedging	Statement of Comprehensive Income	Three Months Ended January 31,					Six Months Ended January 31,
instruments	(Loss) Location	2020		2019			2020			2019
		(in thousands)					(in thousands)
Foreign exchange forward contracts	Net income (loss) resulting from foreign exchange transactions	$	20	$	(24	)	$	(54	)	$	(174	)