Derivative Instruments

6 Months Ended

Jan. 31, 2022

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 unaudited condensed consolidated statements of comprehensive income. 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, 2022, were as follows:

Settlement Date	U.S. Dollar Amount		NOK Amount
Feb-22		225,000		1,967,896
Mar-22		225,000		1,968,684
Apr-22		225,000		1,969,696
May-22		225,000		1,970,619
Total	$	900,000		7,876,895

Settlement Date	U.S. Dollar Amount		EUR Amount
Feb-22		225,000		189,037
Mar-22		225,000		188,926
Apr-22		225,000		188,800
May-22		225,000		188,673
Total	$	900,000		755,436

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

		January 31,		July 31,
Assets and Liabilities Derivatives:	Balance Sheet Location	2022		2021
Derivatives not designated or not qualifying as hedging instruments		(in thousands)
Foreign exchange forward contracts	Accrued expenses and other current liabilities	$	67	$	54

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

		Thre Months Ended January 31,					Six Months Ended January 31,
Amount of Gain (Loss) Recognized on Derivatives		2022			2021		2022			2021
Derivatives not designated or not qualifying as hedging instruments	Location of Gain (Loss) Recognized on Derivatives	(in thousands)					(in thousands)
Foreign exchange forward contracts	Net gain (loss) resulting from foreign exchange transactions	$	(127	)	$	92		(117	)	$	51