Derivatives and Hedging Activities

The Company utilizes forward foreign exchange contracts to reduce the exchange rate risk of specific foreign currency denominated transactions. These contracts typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date, with maturities of less than 18 months, which qualify as cash flow hedges or net investment hedges under the accounting guidance for derivative instruments and hedging activities. The primary objective of the Company’s foreign currency exchange risk management program is to minimize the impact of currency movements due to transactions in other than the respective subsidiaries’ functional currency and to minimize the impact of currency movements on the Company’s net investment denominated in a currency other than the U.S. dollar. To achieve this objective, the Company hedges a portion of known exposures using forward foreign exchange contracts. As of July 31, 2019 and 2018, the notional amount of outstanding forward foreign exchange contracts was $29,389 and $32,667, respectively.

The Company hedges a portion of known exposures using forward foreign exchange contracts. Main exposures are related to transactions denominated in the British Pound, Euro, Canadian dollar, Australian dollar, Mexican Peso, Chinese Yuan, Malaysian Ringgit and Singapore dollar. Generally, these risk management transactions will involve the use of foreign currency derivatives to minimize the impact of currency movements on non-functional currency transactions.

Cash Flow Hedges

The Company has designated a portion of its forward foreign exchange contracts as cash flow hedges and recorded these contracts at fair value in the accompanying Consolidated Balance Sheets. For these instruments, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and in the cash flow hedge section of the Consolidated Statements of Comprehensive Income, and reclassified into income in the same period or periods during which the hedged transaction affects income. At July 31, 2019 and 2018, unrealized gains of $805 and $1,017 have been included in OCI, respectively. These balances are expected to be reclassified from OCI to income during the next twelve months when the hedged transactions impact income. For the years ended July 31, 2019, 2018, and 2017, the Company reclassified gains of $1,048, losses of $552, and losses of $486 from OCI into cost of goods sold, respectively.

As of July 31, 2019 and 2018, the notional amount of outstanding forward foreign exchange contracts designated as cash flow hedges was $26,013 and $27,150, respectively.

Net Investment Hedges

The Company has also designated certain third party-foreign currency denominated debt instruments as net investment hedges. On May 13, 2010, the Company completed the private placement of €75,000 aggregate principal amount of senior unsecured notes consisting of €30,000 aggregate principal amount of 3.71% Series 2010-A Senior Notes, which were repaid during fiscal 2017, and €45,000 aggregate principal amount of 4.24% Series 2010-A Senior Notes, due May 13, 2020. This Euro-denominated debt obligation was designated as a net investment hedge to selectively hedge portions of the Company's net investment in European foreign operations. The Company’s foreign denominated debt obligations are valued under a market approach using publicized spot prices, and the net gains or losses attributable to the changes in spot prices are recorded as cumulative translation within AOCI and are included in the foreign currency translation adjustments section of the Consolidated Statements of Comprehensive Income. As of July 31, 2019 and 2018, the cumulative balance recognized in accumulated other comprehensive income were gains of $12,440 and $9,961, respectively, on the Euro-denominated debt obligations. The changes recognized in other comprehensive income during the years ended July 31, 2019, 2018 and 2017, were gains of $2,480, $612, and losses of $1,792, respectively, on the Euro-denominated debt obligations.

Non-Designated Hedges

During the fiscal years ended July 31, 2019, 2018, and 2017, the Company recognized losses of $52, gains of $24, and losses of $2,508, respectively, in “Investment and other income” in the accompanying Consolidated Statements of Income related to non-designated hedges.

Fair values of derivative and hedging instruments in the accompanying Consolidated Balance Sheets were as follows:



	July 31, 2019						July 31, 2018
	Prepaid expenses and other current assets		Other current liabilities		Current maturities on long-term obligations		Prepaid expenses and other current assets		Other current liabilities		Long-term obligations
Derivatives designated as hedging instruments:
Foreign exchange contracts (cash flow hedges)	$	472	$	—	$	—	$	1,076	$	—	$	—
Foreign currency denominated debt (net investment hedges)	—		—		50,189		—		—		52,668
Derivatives not designated as hedging instruments:
Foreign exchange contracts	2		5		—		1		3		—
Total derivative instruments	$	474	$	5	$	50,189	$	1,077	$	3	$	52,668