Derivative Instruments

9 Months Ended

Apr. 30, 2016

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 hedge exchange rates associated with a portion of our forecasted international expenses.

As of April 30, 2016, we had forward contracts outstanding with notional amounts totaling $2.4 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 Sheets. At April 30, 2016 and July 31, 2015 we had a derivative liability of $0.1 million and $0.5 million, respectively, included in other current liabilities in our Consolidated Balance Sheets. Realized gains and losses on the cash flow hedges are recognized in our Consolidated Statements of Operations in the period when the payment of expenses is recognized. During the three and nine months ended April 30, 2016, the realized loss on the cash flow hedges was $0.2 million and $0.6 million, respectively, which was included in Cost of sales and Operating expenses in our Consolidated Statement of Operations. During the three and nine months ended April 30, 2015, the realized loss on these cash flow hedges was $0.3 million. We expect all contracts currently outstanding to settle as of July 31, 2016 and any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to operating expenses.