Derivative Financial Instruments and Hedging Activities (Tables)

6 Months Ended

Feb. 28, 2014

Fair Value of Assets and Liabilities Related to Foreign Forward Exchange Contracts Measured on Recurring Basis

The following table presents the Company’s assets and liabilities related to forward foreign exchange contracts measured at fair value on a recurring basis as of February 28, 2014, aggregated by the level in the fair-value hierarchy in which those measurements are classified (in thousands):


	Level 1		Level 2			Level 3		Total
Assets:
Forward foreign exchange contracts	$	—	$	3,701		$	—	$	3,701

Liabilities:
Forward foreign exchange contracts		—		(8,502	)		—		(8,502	)

Total	$	—	$	(4,801	)	$	—	$	(4,801	)

Fair Value of Derivative Instruments Located on Consolidated Balance Sheets Utilized for Foreign Currency Risk Management Purposes

The following tables present the fair values of the Company’s derivative instruments located on the Condensed Consolidated Balance Sheets utilized for foreign currency risk management purposes at February 28, 2014 and August 31, 2013 (in thousands):

Fair Values of Derivative Instruments
At February 28, 2014

Asset Derivatives

Liability Derivatives

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Derivatives designated as hedging instruments:

Forward foreign exchange contracts

Prepaid expenses
and other current
assets

1,944

Accrued
expenses

2,510

Derivatives not designated as hedging instruments:

Forward foreign exchange contracts

Prepaid expenses
and other current
assets

1,757

Accrued
expenses

5,992

Fair Values of Derivative Instruments
At August 31, 2013

Asset Derivatives

Liability Derivatives

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Derivatives designated as hedging instruments:

Forward foreign exchange contracts

Prepaid expenses
and other current
assets

4,357

Accrued
expenses

3,740

Derivatives not designated as hedging instruments:

Forward foreign exchange contracts

Prepaid expenses
and other current
assets

7,091

Accrued
expenses

4,645

Impact of Derivatives for Foreign Currency Risk and Not Designated as Hedging Instruments on Earnings

The following tables present the impact that changes in fair value of derivatives utilized for foreign currency risk management purposes and not designated as hedging instruments had on earnings during the six months ended February 28, 2014 and 2013 (in thousands):


Derivatives not designated as hedging instruments	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative during the Six Months Ended February 28, 2014
Forward foreign exchange contracts	Cost of revenue	$	1,959


Derivatives not designated as hedging instruments	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative during the Six Months Ended February 28, 2013
Forward foreign exchange contracts	Cost of revenue	$	(11,150	)

The changes related to cash flow hedges (both forward foreign exchange contracts and interest rate swaps) included in AOCI net of tax are as follows (in thousands):


	Six months ended February 28, 2014
Accumulated other comprehensive loss, August 31, 2013	$	(5,050	)
Change in fair value of derivative instruments		(1,494	)
Reclassification of net losses realized and included in net income related to derivative instruments		3,570

Accumulated other comprehensive loss, February 28, 2014	$	(2,974	)


	Six months ended February 28, 2013
Accumulated other comprehensive loss, August 31, 2012	$	(7,153	)
Change in fair value of derivative instruments		509
Reclassification of net losses realized and included in net income related to derivative instruments		381

Accumulated other comprehensive loss, February 28, 2013	$	(6,263	)

Forward foreign exchange contracts

Impact of Derivatives for Foreign Currency Risk (Interest Rate Risk) and Designated as Hedging Instruments on Accumulated Other Comprehensive Income (Loss) and Earnings

The following tables present the impact that changes in fair value of derivatives utilized for foreign currency risk management purposes and designated as hedging instruments had on AOCI and earnings during the six months ended February 28, 2014 and 2013 (in thousands).


Derivatives in Cash Flow Hedging Relationship during the Six Months Ended February 28, 2014	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)			Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Forward foreign exchange contracts	$	(2,954	)	Net revenue	$	(2,999	)	Net revenue	$	33

Forward foreign exchange contracts	$	2,156		Cost of revenue	$	2,123		Cost of revenue	$	4,043

Forward foreign exchange contracts	$	(56	)	Selling, general and administrative	$	(255	)	Selling, general and administrative	$	90

Forward foreign exchange contracts	$	(640	)	Income from discontinued operations, net of tax	$	(486	)	Income from discontinued operations, net of tax	$	210


Derivatives in Cash Flow Hedging Relationship during the Six Months Ended February 28, 2013	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)			Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Forward foreign exchange contracts	$	(1,361	)	Net revenue	$	(1,905	)	Net revenue	$	120

Forward foreign exchange contracts	$	2,242		Cost of revenue	$	3,545		Cost of revenue	$	3,886

Forward foreign exchange contracts	$	23		Selling, general and administrative	$	303		Selling, general and administrative	$	136

Forward foreign exchange contracts	$	(395	)	Income from discontinued operations, net of tax	$	(371	)	Income from discontinued operations, net of tax	$	268

Interest rate swap

Impact of Derivatives for Foreign Currency Risk (Interest Rate Risk) and Designated as Hedging Instruments on Accumulated Other Comprehensive Income (Loss) and Earnings

The following tables present the impact that changes in the fair value of the derivative utilized for interest rate risk management and designated as a hedging instrument had on AOCI and earnings during the six months ended February 28, 2014 and 2013 (in thousands):


Derivatives in Cash Flow Hedging Relationship during the Six Months Ended February 28, 2014	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)		Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Interest rate swap	$	—	Interest expense	$	(1,953	)	Interest expense	$	—


Derivatives in Cash Flow Hedging Relationship during the Six Months Ended February 28, 2013	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)		Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Interest rate swap	$	—	Interest expense	$	(1,953	)	Interest expense	$	—