Derivatives and Hedging Activities

12 Months Ended

Jul. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company utilizes forward foreign exchange currency 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.

Main foreign currency 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.

The U.S. dollar equivalent notional amounts of outstanding forward exchange contracts were as follows:


	July 31, 2020		July 31, 2019
Designated as cash flow hedges	$	24,600	$	26,013
Non-designated hedges	3,107		3,376
Total foreign exchange contracts	$	27,707	$	29,389

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 on the accompanying Consolidated Balance Sheets. For these instruments, the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into income in the same period or periods during which the hedged transaction affects income. At July 31, 2020 and 2019, unrealized losses of $385 and gains of $805 have been included in AOCI, respectively.

Net Investment Hedges

The Company has designated certain third party-foreign currency denominated debt instruments as net investment hedges. On May 13, 2010, the Company completed the private placement of €75.0 million aggregate principal amount of senior unsecured notes consisting of €30.0 million aggregate principal amount of 3.71% Series 2010-A Senior Notes, which were repaid during fiscal 2017, and €45.0 million aggregate principal amount of 4.24% Series 2010-A Senior Notes, which were repaid during fiscal 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 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 Statement of Comprehensive Income. As of July 31, 2020 and 2019, the cumulative balance recognized in accumulated other comprehensive income were gains of $13,957 and $12,440, respectively, on the Euro-denominated debt obligations.

The following table summarizes the amount of pre-tax gains and losses related to derivatives designated as hedging instruments:


	July 31, 2020		July 31, 2019		July 31, 2018
(Losses) gains recognized in OCI:
Foreign exchange contracts (cash flow hedges)	$	(576)	$	837	$	966
Foreign currency denominated debt (net investment hedges)	1,517		2,480		612
Gains reclassified from OCI into cost of goods sold:
Forward exchange contracts (cash flow hedges)	614		1,048		(551)

Non-Designated Hedges

During the fiscal years ended July 31, 2020, 2019, and 2018, the Company recognized gains of $2, losses of $52, and gains of $24, respectively, in “Investment and other income” in the 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, 2020						July 31, 2019
	Prepaid expenses and other current assets		Other current liabilities		Prepaid expenses and other current assets		Other current liabilities		Current maturities on long-term obligations
Derivatives designated as hedging instruments:
Foreign exchange contracts (cash flow hedges)	$	588	$	761	$	472	$	—	$	—
Foreign currency denominated debt (net investment hedges)	—		—		—		—		50,189
Derivatives not designated as hedging instruments:
Foreign exchange contracts	6		16		2		5		—
Total derivative instruments	$	594	$	777	$	474	$	5	$	50,189