Derivative Instruments

9 Months Ended

Apr. 30, 2015

Derivative Instruments

8. Derivative Instruments

Certain of our foreign operations have revenue and expenses transacted in currencies other than the U.S. dollar. In order to mitigate foreign currency exchange risk, we use forward contracts to lock in exchange rates associated with a portion of our forecasted international expenses.

As of April 30, 2015, we had forward contracts outstanding denominated in Canadian dollars with notional amounts totaling $2.7 million. These contracts have been designated as cash flow hedges and the unrealized loss of $0.1 million, net of tax, on these contracts is reported in Accumulated other comprehensive loss in the Consolidated Balance Sheet. As of April 30, 2015, the fair value of derivatives designated as hedging instruments are presented in Other current liabilities on our Consolidated Balance Sheet. There were no outstanding derivatives as of July 31, 2014. Realized gains and losses on the cash flow hedges are recognized in cost of sales and operating expenses in our Consolidated Statements of Operations in the period when the payment of expenses is recognized. During both the three and nine months ended April 30, 2015, the realized loss on the cash flow hedges was $0.3 million. During the three and nine months ended April 30, 2014, the realized gain (loss) on the cash flow hedges were $0.1 million and $(0.2) million, respectively. We expect all contracts currently outstanding to settle as of July 31, 2015 and any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to cost of sales and operating expenses.